30 October 2017

Parkiet: “The Halloween effect will help sustain global bull markets”

“It is scientifically proven that in the autumn-winter period return rates are significantly higher than in the summer. Therefore, it’s theoretically worth buying stocks now. Yet, there are some serious objections,” reports Parkiet. The article quotes Marta Walendzewicz, ARIA Fund’s Investment Analyst.

“WIG broad market index has recorded an increase of almost 30 percent from November 2016 until the end of April; and dropped significantly in May to only a few percent above the line. These data fit perfectly into the concept of an investment strategy called Halloween effect, described first by Sven Bouman and Ben Jacobsen. They found that all stock market sectors and industries perform better during winter months on as many as 36 out of the 37 markets examined. They also said that better results were achieved by selling shares at the end of April and buying them off at the end of October rather than keeping them in the portfolio throughout the period,” reports Parkiet.

Marta Walendzewicz, ARIA Fund’s Investment Analyst, explains: “The so-called Halloween effect refers to seasonal tendency for a significantly stronger stock market growth that runs from November to May. This phenomenon in the US market has been scientifically confirmed through long-term observations.
With minor exceptions, the effect has persisted for the past 20 years, occurring about four times every five-year interval. Is Polish market any different? It turns out that the event occurs on the Warsaw Stock Exchange with similar frequency it does on the New York Stock Exchange – of course not without exceptions. For example, the event didn’t happen between 2012-2014, which was probably an aftermath of the fiscal crisis in Europe. But in the last three years there again was correlation with the US market as the effect was present on both stock exchanges at the same time. Unless the positive climate on the Warsaw Stock Exchange ends, there is a good chance that the Halloween effect will continue to be visible in the months to come.” Full article (in Polish) available here:Parkiet